To encourage infrastructure development and affordable housing, RBI today exempted long term bonds from mandatory regulatory norms like CRR and SLR if the money raised is used for funding of such projects.
RBI said that lending for affordable housing means loans eligible under priority sector, and loans up to Rs 50 lakh to individuals for houses costing up to Rs 65 lakh located in the six metropolitan centres-- Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.
For other areas, it covers loans of Rs 40 lakh for houses with values up to Rs 50 lakh.
"The recent move by RBI is a welcome move as it would help stimulate demand for housing and make houses affordable to some extent," KPMG's Partner and Head of Real Estate and Construction Neeraj Bansal said.
"The move is expected to reduce Equated Monthly Installment (EMI) of a home loan borrower by 8-10 per cent, which coupled with recent income tax incentives have the potential to boost annual savings of an individual to the tune of Rs 1 lakh," he added.
The step taken by RBI is a positive step towards improving liquidity and reducing cost of funds for infrastructure sector.
"The inclusion of housing sector in this provision is a positive initiative by RBI and would help stimulate demand for housing in the country," Bansal said.
The cost of funds to infrastructure sector is expected to come down by 100-200 basis points as banks would no longer need to meet regulatory requirements of maintaining required cash reserve ratio (CRR), statutory reserve ratio (SLR) and priority sector lending (PSL) on funds raised for infrastructure and housing sector.
"Currently, housing loans below Rs 20 lakh have lower interest rates as they fall into priority sector lending. With this step, loans up to Rs 50 lakh in 6 metropolitan cities (housing costing up to Rs 65 lakh) and Rs 40 lakh in other cities (housing costing up to Rs 50 lakh) a major chunk of housing demand are set to get cheaper," Bansal said.
The central bank had said yesterday it intends to "ease the way for banks to raise long term resources to finance their long term loans to infrastructure as well as affordable housing".